Financial Literacy, Crypto, and the Path to Financial Freedom with Oleg Izyumenko

Without financial education in the school system, many people simply do not have the knowledge they need to make the right money decisions.

People like Oleg Izyumenko, a contractor in the financial services industry, is trying to change that. Oleg joined this episode of Disruption Talks to discuss financial literacy and education, how to be smarter with your money, the role of government in financial education, and much more.

What is financial literacy?

Financial literacy means being equipped with the knowledge to make good financial decisions in different areas of your life. As decisions around money management become more complex, it’s important for individuals to improve their financial literacy.

Someone with good financial literacy will make smarter savings choices, have a retirement plan, avoid overspending, and perhaps even be on the path to financial independence.

Many people lack knowledge around things like how credit works, inflation, interest rates, compounding, and investment.

This can lead to poor decision-making, unmanageable debt, overspending, and a lack of retirement options in later life.

Filip Sobiecki: Could you give us a personal introduction?

Oleg Izyumenko: Academically, my background is in computer science and economics. For my graduate program, I started in international financial analysis at one of Sweden’s business schools and then went to work in the traditional financial sector.

I helped people with their savings and investments in personal banking in the Swedish market. I now work as an independent contractor, helping people with savings and expanding their portfolios with digital assets.

What made you decide to help people in this way?

I have worked as an educator for most of my working life. Six years ago, I got to teach a group of recent immigrants and refugees, people with tough social backgrounds in Sweden. Some of the modules that I got to teach included the basics of financial literacy. I noticed how much I enjoyed talking about those issues and helping people who had very little to improve their lives.

I also embarked on a journey around seven years ago to become financially free. The last booster to this was my personal discovery of Bitcoin in 2016.

What market trends make financial literacy even more important today?

It's always been a part of the human ambition to improve your life, create better standards, pass significant wealth down to the next generation of your family, or give back to the world.

These ideas of capital accumulation, saving, investing smartly, and amplifying your wealth have always been around. However, for once, it’s much harder for the younger generations to build up enough savings or start investing.

The old financial advice that worked well for our parents doesn’t work in the same way these days.

For our generation and the generations coming after us, there is no longer a guarantee that we will prosper by the time we hit retirement age.

Maybe we will have to sacrifice more. Maybe we need to work harder.

Above all, we need to be smarter with our money and savings. We can’t just set them aside in a standard savings account. You ideally need to start investing so your money isn’t swallowed by inflation.

If it’s harder to manage your money and easier to get into debt now, who’s to blame? Is anyone to blame?

It’s down to many different factors. Wages for most of the middle class have been stagnant for five decades, while asset prices have increased dramatically in equities, real estate, and other types of assets.

Then there’s also the culture of immediate gratification where everything is instantly delivered.

It’s almost too tempting for people to borrow from the future to satisfy the desires of today.

I would say that goes directly opposite to what many financial educators are preaching, which is to live below your means, consume less, save for a rainy day, invest, and prioritize the future over the present.

You have to be humble, modest, and frugal with what you're putting your money into. You always need to pay yourself first, and by that, I mean yourself in the future.

If you’re broke in ten or 20 years, who’s responsible? It’s you. If, on the other hand, you find yourself living your best life, you can give some credit to the people around you and financial tools, but it’s down to you really.

Other than personal responsibility, what role do financial institutions and the government play?

The availability of cheap and accessible credit is really wreaking havoc in people's lives. Of course, consumer protection should be in place, and that's the role that the government can play to ensure people are safe.

Financial education is also crucial. I feel like the public education system is not doing anything on that front to educate our youth on those matters. It’s kind of funny because we spend at least 10-12 years in school learning a wide range of subjects, most of which have very little to do with money.

Then we graduate and spend most of our waking hours trying to figure out how to get money, what to spend it on, and how to manage it. School is not preparing us to manage our finances.

Also, the system incentivizes us to spend as soon as we can because people see what is happening with the purchasing power of their savings. Every year your money can buy your less than it did when you first received it.

People are incentivized to spend their money rather than save it. There are no good options for saving anymore.

That’s where interest in things like Bitcoin and alternative assets come in.

What good do you think will come out of Bitcoin?

Bitcoin specifically is a deflationary asset in dollar terms. It’s money that is inflating, slower and slower every four years, and it’s a very sound form of money just like gold used to be when the world was on the Gold Standard.

Bitcoin incentivizes individuals to save for the future, to prioritize the future over the present. It could be a game-changer, and that's why experiments like in El Salvador, where they made Bitcoin legal tender alongside their national currency, are so interesting to follow.

People will eventually see a significant share of their income denominated in Bitcoin, so sooner or later, they will see the value of it. It’s volatile week to week, but if your investment is at least three to five years and you have patience, you will realize it’s the best-performing investment.

What makes you think crypto and Bitcoin are a wise path to financial freedom?

Right now, it’s an attractive option because we are still so early in its adoption. Investing in crypto now would be like investing in the original internet companies back in the 90s. Of course, there’s always the risk of a dot-com bubble-style crash, but those that survived have benefitted enormously since.

On the other hand, I would say the attractiveness of crypto is also in figuring out your diversification strategy.

Even if you see that this asset class is outperforming everything else, it still might not be the wisest move to put all your eggs in the same crypto basket. However, it is a new asset class, and it makes sense to diversify your portfolio with a mixture of real estate, bonds, equities, and now crypto.

It all comes down to your understanding of what you're investing into as well as your personal risk tolerance. I would say one of the most reckless things you can do with your money today is not invest any of your savings in crypto, especially in those that have already proven their staying power, such as Bitcoin and Ethereum.

What does your decision-making framework look like?

For me, I would say it's a balance between my intuition and looking at the facts. I trust my gut feeling and look out for red flags that trigger alarm bells. But I also like to study the facts. Not to the extent that I wouldn’t be able to make a decision, though. You can never control everything 100%, so you have to make a decision at some point.

If you had a magic wand and could give every 12-year-old in the world a brand new skill or piece of knowledge, what would it be?

I would like every single 12-year-old on the planet to master a language fluently. It doesn't really matter which language it is, as long as it's the same for everybody. It would create this truly connected global generation of people who can communicate and understand each other.

This discussion is part of our Disruption Talks recordings, where we invite experts to share their insights on winning innovation strategies, the next generation of disruptors, and scaling digital products. To get unlimited access to this interview and many more, sign up here: www.netguru.com/disruption/talks